Anglian Water Executives Face Potential Bonus Ban Amid Performance Concerns

The water services regulator has cautioned executives at a water company that they could be prohibited from receiving bonus payments if the firm’s performance does not improve. Ofwat indicated that, following a series of serious pollution incidents, any performance-related remuneration for senior Anglian Water personnel might lack justification. Anglian Water has faced prosecution on five occasions since 2022. A spokesperson for the water company affirmed its support for linking financial rewards to company performance. They further stated: “Especially when it comes to protecting the environment and supporting customers.” In October, Anglian Water was directed by the water regulator to issue refunds totaling £38.1m to its customers. This represented the second-largest refund mandated by Ofwat among UK water companies. Within a largely critical report, the regulator highlighted a criminal conviction against Anglian Water by the Environment Agency, a low environmental performance assessment rating, and its classification as “in the lagging category” in Ofwat’s most recent water company performance report. In 2023, the company incurred a fine of £2.65m, which was subsequently reduced to £300,000 after an appeal in February, following the overflow of millions of litres of untreated sewage into the North Sea at Jaywick, Essex. Additionally, it was fined £1.2m after admitting to causing pollution in Cambridgeshire, Buckinghamshire, and Northamptonshire in 2019. The report noted that earlier this year, the company’s chief executive informed the board he would decline any bonus payments if awarded, citing “the number of serious pollution incidents.” However, the company’s chief financial officer did receive an additional performance-related payment of £95,000. While Ofwat deemed the bonus payment for the company’s finance chief difficult to justify, the regulator was unable to employ recovery mechanisms to block the bonus because customer funds were not directly utilized to finance it. The same report revealed that three other water firms were prevented from using customer money to pay bonuses amounting to a collective £1.6m. Ofwat commented: “It is not enough for companies to just acknowledge events which clearly indicate poor performance, they need to be clear how any payment at all is justified in the light of these events.” The regulator expressed its expectation that companies will consider this for future bonus payments and ensure proper justification. In a statement, Anglian Water asserted that its decisions regarding pay and bonuses are tied to performance across the business and are overseen by an independent remuneration committee. It added: “If we do not meet our targets, it is reflected in potential financial reward across all Anglian Water employees.” Pippa Heylings, the Liberal Democrat MP for South Cambridgeshire, has advocated for the establishment of a new independent water authority. She contended that Ofwat had “not been effective in cracking down on these polluting firms” and argued that bill payers require a regulator “that has teeth.” She described the £95,000 payment to Anglian Water’s chief financial officer as “scandalous.” David Black, the chief executive of Ofwat, stated that water companies must undertake further efforts to “rebuild public trust.”